Portfolio Construction Considerations

This section provides a broad overview of the choices a non-traded REIT makes when it designs an investment plan. It is not meant to give any particular guidance about which approach is a better strategy. In fact, when creating a portfolio allocation that includes non-traded REITs, it is often a best practice to diversify with multiple non-traded REITs from multiple sponsors.

KEY POINT

It is critical to have a broad understanding of the various types of REITs within the non-traded REIT universe.

A financial advisor should read the prospectus and other marketing material to determine the exact nature or proposed nature of a specific non-traded REIT before making investment recommendations. Remember, too, that in general, the reason an investor should choose to invest in a particular non-traded REIT (or any other direct investment for that matter) is to benefit from the skilled expertise of the management and sponsor of the fund.